Struggling automaker General Motors is facing more bad news with losses for the 1st quarter totaling $6 billion after sales plunged nearly 50 percent. Cynthia Bowers reports.
>> Today's bad news is more evidence GM's fate is still up in the air. Today the company said it lost 6 billion dollars for the first quarter. Vehicle sales plunged nearly 50% from the same period last year. Nearly 400,000 fewer sold.
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>> And their latest attempt to sell more cars caused a new PR nightmare. The ailing automaker is entertaining 500 of its biggest customers at an Arizona resort corporate and rental car companies who purchase 27% of all GM vehicles sold last year.
>> They need to convince fleet buyers that they will be around.
>> Meanwhile GM is going ahead with plans to cut 42% of its dealerships. First targeting those who sell discarded brands like Hummer, SAAB, Saturn and Pontiac but in all 2600 dealers will get a letter telling them they're done.
>> I think everybody has already been graded. I think that the letters are due to come out I think around the 10th or the 11th of May.
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>> At Bredemann Chevrolet in Park Ridge Illinois John Bredemann says he was told GM considered everything from location, to sales figures, to customer satisfaction, even debt load.
>> I think we're in good shape but that doesn't mean that you know your heart doesn't go out to somebody who may not be meeting all those criteria.
>> What is not known is how many of the 2600 dealers and their 10's of thousands of employees will go quietly because dealerships are so vital to local economies generating billions in sales revenue, nearly every state has some sort of franchise purchase protection, which could prove costly to GM.
>> A manufacturer can't just come and say you know what thanks for all the years of service. Thanks for the investment you've made in your facility etc. we're done with you. They have to pay.
>> For GM it's a no win situation. Everything they do to save money in the long run costs money in the short term and the government says they have until June 1st to prove themselves or go into bankruptcy. Background sounds Cynthia Bowers CBS News, Chicago.
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